Foreign flights

The international version of the regional air connectivity scheme UDAN is taxiing for take-off. Recently, the Airports Authority of India, on behalf of the Civil Aviation Ministry, the Centre and the Assam Government, invited proposals from bidders for selection under the International Air Connectivity Scheme. The plan is to connect Guwahati directly to some key international destinations in the neighbourhood such as Kathmandu, Yangon, Kuala Lumpur, Singapore and Bangkok. Such direct air connectivity, it is hoped, would promote the socio-economic development of Assam by allowing seamless flow of tourists and businesspeople into and out of Guwahati, the gateway to India’s North-East. To encourage air carriers to fly on what are essentially untested routes, the Assam Government is offering a subsidy in the form of pre-decided financial support per seat on routes under the scheme. Airlines are required to bid on the number of passenger seats per flight for which such support is required. The Airports Authority of India, at its discretion, could also offer concessions on landing and parking fees. The Assam Government is putting to use the open skies policy that India has with the ASEAN and SAARC groups of countries that allows unlimited flights to and from these nations to 18 Indian destinations, including Guwahati and Bhubaneswar. Assam is attempting what Odisha did in 2017 when it chose Air Asia Berhard to launch direct services from Bhubaneswar to Kuala Lumpur and gave the airline financial subsidy for a year. But now, under the international UDAN scheme, Assam will provide financial support for three years.

More international UDAN tenders could be in the offing on behalf of States that seek to connect their cities directly to foreign shores. This should be welcome. One, air connectivity, domestic and international, has a proven multiplier effect on tourism, investments, economic growth and job creation. Anything that can spur these is desirable. Many of India’s smaller cities have high potential in terms of tourism and commerce. Further, if State governments show initiative and are willing to provide the necessary financial support, they should be encouraged. Such schemes also fit in well with the Centre’s ‘Neighbourhood First’ policy.

That said, the international UDAN scheme has some restrictive clauses that inhibit competition. One, only aircraft with passenger seating capacity of 70 seats or more can launch operations on such routes. Next, only Indian carriers can participate in the scheme. This could draw protest from Indian players with only smaller aircraft and also from foreign carriers. These distortions need a relook. Also, the scheme’s launch could also have been timed better. Subsidy-based interventions generally work well in markets that are doing well; the Indian aviation sector at present is reeling under heavy cost pressures and low fares.

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